Dawn of Industrialisation? The Indonesian Automotive Industry

Kaoru Natsuda, Kozo Otsuka, John Thoburn

Research output: Contribution to journalArticlepeer-review

17 Citations (Scopus)

Abstract

This article traces the development of industrial policy towards the Indonesian motor industry within the automotive global value chain. Showing the current dominance of Japanese motor assemblers in Indonesia, it notes the rather undeveloped nature of the locally owned supporting industry, particularly compared with that of neighbouring Thailand. Most investment in auto-parts production has been by foreigners. Nevertheless, Indonesia's rapid domestic-market growth has allowed it to attract foreign automotive investment without having to offer excessively generous incentives. While the continued entry of foreign suppliers of auto parts into Indonesia offers opportunities for local suppliers to upgrade their productive capabilities, it also limits their chances of becoming first-tier suppliers themselves. Japanese automotive investors are optimistic about Indonesia's export potential, more so than Malaysia's.

Original languageEnglish
Pages (from-to)47-68
Number of pages22
JournalBulletin of Indonesian Economic Studies
Volume51
Issue number1
DOIs
Publication statusPublished - 30 Mar 2015

Keywords

  • automotive
  • global value chains
  • industrialisation
  • motor industry

Cite this